Title 31--INSURANCE INSURANCE DEPARTMENT [ 31 PA. CODE CH. 84b ] Actuarial Opinion and Memorandum [38 Pa.B. 5855]
[Saturday, October 25, 2008]The Insurance Department (Department) amends Chapter 84b of the Department's regulations (31 Pa. Code Ch. 84b) (relating to actuarial opinion and memorandum) to read as set forth at 38 Pa.B. 1949 (April 26, 2008).
Statutory Authority
The final-form rulemaking is adopted under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) and section 301 of The Insurance Department Act (Act) (40 P. S. § 71).
Comments and Response
Notice of proposed rulemaking was published at 38 Pa.B. 1949 with a 30-day comment period. During its regulatory review, the Independent Regulatory Review Commission (IRRC) did not submit comments to the Department. During the 30-day comment period, comments were received from Sam Marshall of the Insurance Federation of Pennsylvania, Inc. (IFP). The following is a response to the comments received.
The IFP indicated that it generally supports the regulations as consistent with the NAIC's model regulations and submitted two editorial comments. First, the IFP suggested that the references to Exhibits 8 through 11 be updated to match the NAIC numbering. Because the IFP's suggestion pertained to portions of the regulations that were bracketed to be deleted by the Department, the Department determined that the exhibits need not be renumbered.
The IFP also suggested that the regulations be clarified so that the Regulatory Asset Adequacy Issues Summary is required only upon the Commissioner's request. The Department does not see a need to clarify this requirement, in that it is consistent with the NAIC model and Regulatory Asset Adequacy Issues Summary should be filed routinely by domestic life insurance companies and fraternal benefit societies.
Affected Parties
The final-form regulations will apply to life insurance companies and fraternal benefit societies doing business in this Commonwealth.
Fiscal Impact
State Government
There will be no increase in cost to the Department as a result of the adoption of the amendments to Chapter 84b. As part of its solvency monitoring responsibilities, the Department currently reviews statements of actuarial opinion and supporting memoranda. Thus, these final-form regulations will not require any additional staff time or resources to perform the analysis.
General Public
Since the final-form regulations concern the solvency requirements applied to insurers, the public will benefit from a financially sound insurance industry that has the ability to fulfill its contractual obligations under life insurance policies.
Political Subdivisions
The final-form regulations will not impose additional costs on political subdivisions. However, because the final-form regulations promote stability in this Commonwealth's insurance industry, political subdivisions' tax revenues would benefit as a result of fewer insurer insolvencies. Fewer insolvencies would result in less unemployment and would also increase incentives for insurers to market new insurance products in this Commonwealth.
Private Sector
The final-form regulations may impose additional costs on insurers that are currently exempt from submitting an actuarial opinion based on an asset adequacy analysis. The amount of the additional cost will depend on the type and extent of the asset adequacy analysis that the insurer's actuary believes is necessary to submit an actuarial opinion. The final-form regulations provide the actuary flexibility to use professional judgment in performing the analysis.
Paperwork
The adoption of these final-form regulations would not impose additional paperwork on the Department. Insurers that currently do not prepare an actuarial memorandum because the actuarial opinion is not based on an asset adequacy analysis will be required to prepare an actuarial memorandum under the final-form regulation. In addition, insurers are required under the final-form regulation to submit a regulatory asset adequacy issues summary each year. The amount of additional paperwork in preparing the memorandum and summary will depend on the type and extent of the asset adequacy analysis performed.
Effectiveness/Sunset Date
The final-form regulations will become effective January 1, 2009. The Department continues to monitor the effectiveness of regulations on a triennial basis; therefore, no sunset date has been assigned.
Contact Person
Any questions regarding these final-form regulations, should be directed to Peter J. Salvatore, Regulatory Coordinator, Bureau of Administration, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429. Questions may be e-mailed to psalvatore@state.pa.us or faxed to (717) 705-3873.
Regulatory Review
Under section 5(a) of the Regulatory Review Act, (71 P. S. § 745.5(a)), the agency submitted a copy of these final-form regulations on April 16, 2008, to IRRC and to the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee (Committees). In addition to the submitted regulations, the agency has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the agency in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of that material is available to the public upon request.
In preparing these final-form regulations, the Department considered all comments received from IRRC, the Committees and the public. These final-form regulations were deemed approved by the House and Senate Committees on September 17, 2008. Under section 5(g) of the Regulatory Review Act the final-form regulations were deemed approved, effective September 17, 2008.
Findings
The Commissioner finds that:
(1) Public notice of intention to adopt these final-form regulations was been given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) The adoption of this final-form rulemaking in the manner provided in this order is necessary and appropriate for the administration and enforcement of the authorizing statutes.
Order
The Commissioner, acting under the authorizing statutes, orders that:
(a) The regulations of the Department, 31 Pa. Code Chapter 84, are amended by amending §§ 84b.1--84b.5, 84b.8, 84b.9 and 84b.11; and by deleting §§ 84b.6, 84b.7 and 84b.10 to read as set forth at 38 Pa.B. 1949.
(b) The Commissioner shall submit this order and 38 Pa.B. 1949 to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.
(c) The Commissioner shall certify this order and 38 Pa.B. 1949 and deposit them with the Legislative Reference Bureau as required by law.
(d) The final-form regulations adopted by this order take effect January 1, 2009.
JOEL SCOTT ARIO,
Insurance Commissioner(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 38 Pa.B. 5509 (October 4, 2008).)
Fiscal Note: Fiscal Note 11-235 remains valid for the final adoption of the subject regulations.
[Pa.B. Doc. No. 08-1928. Filed for public inspection October 24, 2008, 9:00 a.m.]
